GE HealthCare Technologies (GEHC) - 2025 Q3 - Earnings Call Transcript

Financial Performance - Organic revenue grew 4% year over year, with total revenues of $5.1 billion [9][10] - Adjusted EPS was $1.07, down 6% year over year, impacted by approximately $0.16 from tariffs [10][19] - Free cash flow was $483 million, down $168 million year over year, primarily due to higher receivables and tariff payments [18] Business Segment Performance - Imaging segment organic revenue increased by 4%, with a decline in EBIT margin of 260 basis points due to tariff pressures [13] - Advanced Visualization Solutions (AVS) saw organic revenue growth of 6% and EBIT margin increased by 180 basis points [14] - Patient Care Solutions experienced a 7% decline in organic revenue due to a product hold, with EBIT margin down 680 basis points [15][16] - Pharmaceutical Diagnostics reported a strong quarter with 10% organic revenue growth, although EBIT margin declined by 150 basis points due to planned investments [17] Market Performance - Strong performance noted in EMEA and the U.S. markets, with robust orders growth of 6% across all segments [4][9] - The company is optimistic about the recovery in the Chinese market, with improvements in tender activity [29][30] Company Strategy and Industry Competition - The company is focused on executing its precision care strategy and has invested over $3 billion in R&D since 2022 [21][24] - Strategic acquisitions, such as icometrix, are aimed at enhancing product offerings and market position [7] - The company is entering a new wave of innovation, particularly in AI-powered products and solutions [24] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic revenue growth in the medium term, despite challenges [32][34] - The company raised its adjusted EPS guidance for the full year, reflecting strong performance and healthy capital investment trends [19][20] - Management remains focused on operational improvements and mitigating tariff impacts, with a goal of reducing net tariff impact in 2026 [8][12] Other Important Information - The company has a solid backlog of $21.2 billion, indicating strong future revenue potential [9] - Adjusted EBIT margin was 14.8%, down 150 basis points year over year, primarily due to tariff impacts [10][11] Q&A Session Summary Question: Update on growth in China - Management noted improvements in tender activity and expressed optimism about the long-term potential of the Chinese market [29][30] Question: Confirmation of revenue growth targets - Management confirmed confidence in achieving mid-single-digit organic growth, with expectations for 2026 to exceed current growth rates [32][34] Question: Performance of Patient Care Solutions - Management acknowledged the decline due to a product hold but expects recovery in the fourth quarter [50][51] Question: Opportunities in Electrophysiology - Management highlighted the potential for growth in the ASC setting and the company's leadership position in the market [55][57] Question: Transition of R&D to COGS - Management explained the ongoing transition and its impact on gross margins, with expectations for margin expansion in the fourth quarter [59][60]